Transparency: an underused ally of
private companies

By: Yves Bonin, audit and assurance partner

Whether the focus is on clients, employees or investors, all interactions between your organization and your stakeholders are based on trust. These interactions are also influenced by stakeholders’ perceptions of what motivates you and how you conduct yourself. In the end, trust is an asset that is just as valuable — and just as sustainable — as any other asset that your company may possess. Consider your trust level, particularly how your actions and decisions might be affecting or influencing the people who make up your organizational “ecosystem”. In other words, trust can be a reflection of a company’s overall performance.

Private companies have some catching up to do

According to PwC’s CEO Survey 2018, which included responses from 722 private company leaders worldwide, the respondents appeared to attach great importance to strengthening trust with their workforce. Only 19% reported that trust was declining, compared to 20% of public company CEOs. However, less than one-half of private companies (49%) and only 47% of family-run companies demonstrate policy transparency. In comparison, 57% of listed companies seek transparency. This indicates that private companies have some catching up to do. Developing greater trust within your organization could generate growth-related opportunities! Let’s look at some of the other sustainable value benefits:

Boosting organizational performance. Regardless of whether greater trust brings in new and more dedicated customers, facilitates collaboration by business partners or prompts employees to step up their efforts and get more involved, the impact on your performance is bound to be positive! This is particularly true when it comes to staff morale.

You can generate trust by investing in your employees; after all, your success is largely due to them! So let them know you are willing to invest in their potential and to defend their interests whenever necessary. Find out more about their career aspirations and help them reach their goals.[1] Consider the example of Fraco, a family-run company that decided to embrace transparency by adopting a participative management approach involving its entire workforce. Thanks to this trust-based connection, Fraco’s employees are literally invested in the company’s mission.

Letting companies be true to themselves. During my discussions with business leaders, I noticed that authenticity and the right to be true to oneself (in organizational terms) are equally beneficial within a company as well as externally. Research shows that stakeholders can easily detect when an organization is not conducting itself authentically.[2] This is particularly true when it comes to investors, who typically seek to do business with trustworthy organizations offering long-term opportunities.[3]

Putting the organization in a favourable position in the event of a crisis. No organization is permanently sheltered from a crisis. However, those with a higher level of trust tend to recover more quickly and end up in a better position than their competitors, thus offsetting the impact of a crisis. With the right level of trust, organizations gain a competitive edge and have a better idea of how their business and markets will change in the future.

Helping to overcome stakeholders’ scepticism. A lack of trust is regarded is a threat to growth prospects. Stakeholders today have a greater capacity than ever before to make their voices heard. In tactical terms, trustworthiness enables organizations to generate information and obtain valuable business intelligence by broadening the involvement of their clients and the public. Depending on whom you are talking to, why not communicate openly and honestly if you can? Managers are often reluctant to share information but they should realize that being transparent could be a means to build trust, even in difficult circumstances.

Are you trustworthy?

To gauge your trust level, ask yourself the following questions.[4]

Competence. Does your company accomplish what it sets out to do? People expect companies to be reliable and transparent.

Experience. Does your company keep its promises? People want companies to be proactive while listening to their concerns and making an effort to improve.

Values. Do you genuinely believe in the values you uphold? People want companies to understand their needs and to be concerned about their impact on society.

Greater transparency and trust can build stronger relationships with stakeholders., in addition to shaping their future more effectively. There is no question about it: developing and maintaining your stakeholders’ trust is a key factor in your company’s growth and success!

[1] Henderson Brower H., Wayne Lester S., Audrey Korsgaard M. (2017). Want Your Employees to Trust You? Show You Trust Them. HBR.

[2] Ibid.

[3] Ibid.

[4] Nair S. (2016). 3 ways to build trust in your business. PwC Malaysia.